Why Galena Biopharma, Inc. Shares Tumbled

Galena shares sour after reporting its Q4 results and disclosing an investigation by the Securities and Exchange Commission. Find out what this means for you.

Mar 18, 2014 at 1:33PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Galena Biopharma (NASDAQ:GALE), a biopharmaceutical company focused on developing immunotherapeutic options to treat cancer, fell as much as 21% after reporting its quarterly results after the closing bell last night and disclosing an investigation by the Securities and Exchange Commission.

So what: For the quarter, Galena reported net revenue of $1.3 million, driven by sales of newly acquired FDA-approved drug Abstral for breakthrough cancer pain, and an operating loss of $12.4 million due to higher costs from ongoing clinical studies. In the year-ago quarter, Galena produced no revenue and delivered a smaller operating loss of just $5.6 million. Net loss, however, swelled due to $38.9 million in non-cash charges to $48.5 million, causing Galena to widely miss Wall Street's EPS estimates. On the positive side, though, Galena boosted its 2014 forecast for Abstral sales to a new range of $11 million-$15 million from its previous projections of $8 million-$12 million.

What really has investors up in arms is an admission on page 37 of its annual 10-K filing that "[i]n February 2014we learned that the SEC is investigating certain matters relating to our company and an outside investor-relations firm that we retained in 2013. We have been in contact with the SEC staff through our counsel and are cooperating with the investigation." Concerns have been raised in recent weeks that Galena may have hired a stock promoter to boost the value of its shares (see here and here, for example). Apparently, this has created enough real buzz that the SEC is looking more closely into whether that was the case.

Now what: There are few biotech companies that are as polarizing as Galena Biopharma -- you generally either love it or hate it. This SEC investigation is clearly a blow to a company whose earnings report otherwise signaled -- with the exception of one-time non-cash charges -- that it may be headed in the right direction. Keep in mind, of course, that SEC investigations sometimes turn up nothing or can lead to nothing more than a slap on the wrist. On other occasions, they may lead to hefty fines, which Galena may have difficulty absorbing. There are a lot of possible outcomes here, and given that uncertainty surrounding this investigation, you're probably best off sticking to the sidelines until we have better clarity.

Galena Biopharma may offer investors a ton of potential, but even it could struggle to keep up with this top stock in 2014
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool has no position in any companies mentioned in this article. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information